A permissive borrower cannot claim Section 163A compensation, subject to contractual personal accident cover.

Suraj Nath died after the motorcycle bearing Registration No. AS-11-C-8911, owned by respondent No. 5 and driven by him, collided with a stationary truck on 10 April 2011.

An FIR and U.D. case were registered, but the police subsequently submitted a Final Report.

His legal representatives filed a motor accident claim against the motorcycle’s owner and insurer.

The Tribunal treated the claim as one under Section 163A of the Motor Vehicles Act, 1988 and awarded Rs. 6,51,600 with interest at 9% per annum.

The insurer appealed, contending that the deceased had borrowed the motorcycle with the owner’s permission, had possession and control over it, and therefore stepped into the shoes of the owner, disentitling his legal representatives from claiming compensation under Section 163A against the insurer of that motorcycle.

The owner’s written statement expressly stated that the deceased had taken the motorcycle with his permission for a personal purpose, while the claimant’s evidence established that the deceased was not the owner’s employee.

The insurance policy also included a personal accident cover for the owner/driver upon payment of an additional premium of Rs. 50, with liability limited to Rs. 1,00,000.

1. Whether a person who borrows a motor vehicle with the owner’s permission, drives it for his own purpose, and dies in an accident arising from its use can maintain a claim under Section 163A of the Motor Vehicles Act against the owner and insurer of that vehicle.

2. Whether, notwithstanding the deceased’s ineligibility to claim under Section 163A, his legal representatives were entitled to recover compensation under the contractual personal accident cover contained in the insurance policy, and if so, to what extent.

3. Whether the non-impleadment of the owner, driver and insurer of the stationary truck defeated the claim.

Section 163A of the Motor Vehicles Act imposes no-fault liability for death or permanent disablement arising from the use of a motor vehicle, without requiring proof of wrongful act, neglect or default; however, it does not eliminate the requirement that the claimant be legally entitled to invoke the statutory liability.

Under Ningamma v. United India Insurance Co. Ltd., (2009) 13 SCC 710, and Ramkhiladi v. United India Insurance Co. Ltd., (2020) 2 SCC 550, a borrower who has possession and control of a vehicle and drives it for his own purpose steps into the shoes of the owner and cannot claim under Section 163A against the owner or insurer of that vehicle.

The same principle is reflected in Jhuma Saha, Rajni Devi and Ashalata Bhowmik.

The court distinguished statutory liability from contractual liability: a valid personal accident cover must be enforced according to the insurance policy’s terms.

Where the policy incorporates the applicable Indian Motor Tariff provisions and specifies a liability limit, the insurer’s contractual liability cannot exceed that limit.

The court held that the deceased was not merely driving another person’s motorcycle; the evidence showed that he had obtained it from the owner with permission, was not the owner’s employee, and was exercising possession and control over it for his personal purpose.

He therefore occupied the position of a borrower and stepped into the shoes of the owner.

Consequently, his legal representatives could not treat him as a third party and maintain a Section 163A claim against the insurer of the motorcycle he was driving.

The court nevertheless treated the personal accident cover as an independent contractual obligation.

Since the policy recorded payment of an additional premium and specified owner/driver coverage of Rs. 1,00,000, the insurer remained contractually liable for that amount, but not for the Tribunal’s larger statutory award of Rs. 6,51,600.

The judgment did not ultimately rely on the non-joinder objection in modifying the award.

The Court set aside the award of Rs. 6,51,600 with interest insofar as it imposed statutory liability under Section 163A, holding that the deceased borrower was in the shoes of the owner and was not a third party vis-à-vis the insured motorcycle.

The claimants were, however, held entitled to Rs. 1,00,000 under the contractual personal accident cover in the insurance policy.

Any amount already deposited by the insurer was to be adjusted against that liability, with the balance refunded to the insurer.

The appeal was accordingly disposed of without any order as to costs.